Declining Balance Method

What does it Mean? A common depreciation-calculation system that involves applying the depreciation rate against the non-depreciated balance. Instead of spreading the cost of the asset evenly over its life, this system expenses the asset at a constant rate, which results in declining depreciation charges each successive period.
Investopedia Says... For example, if an asset that costs $1,000 is depreciated at 25% each year, the deduction is $250.00 in the first year and $187.50 in the second year, and so forth.

Terms Related Links

Accounting
Depreciation
General Depreciation System - GDS
Group Depreciation
Modified Accelerated Cost Recovery System - MACRS

Terms Related Links
Appreciating Depreciation - Companies make choices and assumptions in calculating depreciation, and you need to know how these affect the bottom line.

Valuing Depreciation With Straight-Line Or Double-Declining Methods - Appreciate the different methods used to describe how book value is "used up".

Reading The Balance Sheet - Learn about the components of the statement of financial position and how they relate to each other.

Advanced Financial Statement Analysis - Learn what it means to do your homework on a company's performance and reporting practices before investing.



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